Tax day is a week away and I hope you've already filed, because if you haven't, it's quite possible con artists have filed FOR you, using your Social Security number to claim refunds for themselves. Tax-related identity theft has doubled over the past two years and now makes up the single largest category of the crime. In 2009, only 12 percent of identity theft was related to taxes. Now tax identity theft makes up 24 percent of all ID theft crimes reported to the Federal Trade Commission. Crooks have found that Uncle Sam is a pretty easy target and they can scoop up tax refunds using YOUR good name.
Here's the ugly part: if a crook files a tax return using your name and SSN before you file your own return, you'll be stuck having to prove YOU really are yourself and THEY really are the criminals. There's also another twist in which criminals use other people's SSNs when they get jobs. The income from that job then shows up as yours, and when you don't account for it on your tax return, the IRS may come after you. The third twist is when crooks steal the SSN of a child or elderly dependent of yours, and then you have to prove that person really belongs on your tax return. Not only will your refund be delayed, it's possible you may end up spending money to clear your name.
Here are the telltale signs that you may be a victim of tax or wage-related identity theft:
• The IRS sends you a notice stating that more than one tax return was filed for you.
• The IRS sends you a notice stating that you received paychecks from a company you have never heard of.
• The IRS says you owe taxes or there is a collection action against you for a year you were not required to file.
These crimes have surged so fast and furious that the feds are still catching up and figuring out how to help consumers help themselves. It's a treacherous balancing act for the tax man to send out people's refunds in a timely manner while also guarding against fraud. The IRS says it intercepted $1.4 billion worth of tax-related identity theft in 2011. One way they do this is by reaching out to citizens whose returns contain abnormalities before processing the refunds associated with those returns. This is bad news if you're counting on getting that tax return money quickly to help make ends meet, but good news in the long run, since the fraud against you and the IRS is detected before it's final.
If you believe you are a victim of tax-related identity theft, here's what you should do:
• File a report with the Federal Trade Commission's Identity Theft database here.
• Call the FTC's hotline for individual ID theft counseling: 1-877-ID-THEFT
• Contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490.
• Visit the IRS Taxpayer Advocate Service, which has a helpful toolkit, here.
• Fill out the IRS Identity Theft Affidavit, Form 14039.